Wolf P. is an eclectic family pizza & pasta restaurant that is wholly owned by John and Allie Ryan opened in tax year 2017, and now in its second year of operation. The business is organized as a C-Corporation under the name Wolf P. Inc. Their EIN is 904713872 The files the tax information for the operations of the business on Form 1120. Wolf P. uses the accrual method of accounting. The restaurant has been very successful because of its reasonable pricing and family-friendly environment. The restaurant is also unique as patrons are given the dough and food items and can prepare their own pizzas that are then taken back for baking by the service staff. The do-it-yourself food prep is optional, but a huge hit with families and contributes to the success of the establishment.

I. Revenues-Form 1120

Wolf P.'s total cash sales in 2014 $805,398 and its total credit card charges through December 29, 2018 were $1,554,874. In addition, Wolf P. also hosted a party on December 31, 2018. They could have picked up the check totaling $10,000 at 7PM on December 31 but they did not pick up the check until 2:30AM on January 1.

IV. Expenses

a. Employee Salaries & Benefits

John works full time managing Wolf P. , and he pays himself with a form W2. The restaurant had 9 full time employees. Total wages paid for the year was $734,486. Total benefits were 140,000. Included in this figure are wages and benefits for the food preparation staff for 3 employees, which totaled 75,437 for wages and 15,000 for benefits.

John has health insurance coverage for himself and his nine employees, at a cost of $100,000.

Vehicle

The business provides John with a Lexus, purchased in 2018. John uses the actual method to compute expenses. The vehicle is only used for business purposes. Total gas and maintenance receipts totaled $2,534. In addition, the payment of the vehicle was $1,841 per month at 0% APR.

b. Food and Supplies Inventory

Wolf P. gets all its food and food supplies from the same supplier. It placed and used $496,541 in food and food supplies for the year. All such purchases were made on account and payable within 15 days and Wolf P.'s outstanding and unpaid invoices on December 31st totaled $0. Due to an end of the year party, they depleted their entire inventory.

Other Expenses

Wolf P. paid a $1,500 fine from the health department for three health code violations. They properly recorded this on their books.

Wolf P. also bribed the health inspector for $33,500 to ignore 12 critical violations. They recorded this on their books in the "miscellaneous" account.

Wolf P. also paid out the following in 2018, and properly recorded this per books:

Merchant Account Fees$48,425

General liability and property insurance$77,000

Electric & Gas Bills$19,135

Legal & Accounting Fees$5,700

Advertisement Fees$13,250

Charitable Contributions$100,000

Entertainment Expenses$10,000

Meals$50,000

c. Estimated Tax Payments

John made estimated tax payments every quarter of the tax year. He paid $40,000 per quarter; totaling $120,000 for the tax year. Please do not calculate any underpayment penalties.

V.Assets Acquired in 2017 (This section may be helpful to fill out by hand first)

Wolf P. purchased the following assets, all placed in service on 01/01/2017. Wolf P, Inc. has elected out of Bonus Depreciation.

AssetCostProperty ClassSection 179 takenMACRS 2017MACRS 2018

New Kitchen Equipment$350,000

Furniture$35,000

Computers and software$12,000

Food Truck (not luxury)$24,000

VI.Assets Acquired in 2018 (This section may be helpful to fill out by hand first)

Wolf P. purchased the following assets, all placed in service on 6/30/2018. TRPP, Inc. has elected out of Bonus Depreciation.

AssetCostProperty ClassSection 179 takenMACRS 2018

New Dishwasher$45,000

2018 Lexus.$100,000

VII.Income statement prepared for book purposes

Income Statement

for the year ended Dec 31, 2018

Revenues:

Cash and Check Sales$815,398.00

Credit Card Sales1,554,874.00

Less: COGS(496,541.00)

Municipal Bond Interest15,000.00

Total Revenues1,888,731.00

Total Revenues1,888,731.00

Less: Total Expenses before taxes1,385,530.00

Net Income before taxes503,201.00

Less: Income tax expense117,222.21

Net Income385,978.79

For 1120 U.S. Corporation Income Tax Return OMB No. 1545-0123 Department of the Treasury For calendar year 2018 or tax year beginning , 2018, ending Internal Revenue Service Go to www.irs.gov/Form1 120 for instructions and the latest information. 2018 Check if: r identification number 1 a Consolidated return (attach Form 851) . Q 773123456 b Lifeonlife consoli- TYPE Date incorporated dated return . OR Personal holding co. .O PRIN (attach Sch. PH) . D Total assets (see instructions) Personal service corp $ (see instructions) Schedule M-3 attach E Check if: (1) Initial return (2) Final return (3) Name change (4) Address change 1a Gross receipts or sales 1a Returns and allowances . Balance. Subtract line 1b from line 1a 1c 2, 370, 2.72 Cost of goods sold (attach Form 1125-A) . 2 HG.341 Gross profit. Subtract line 2 from line 1c . 3 1$73 72 Dividends and inclusions (Schedule C, line 23, column (a)) Income Interest Gross rents Gross royalties co Capital gain net income (attach Schedule D (Form 1120)) Net gain or (loss) from Form 4797, Part II, line 17 (attach Form 4797) Other income (see instructions-attach statement) . . Total income. Add lines 3 through 10 11 2, 3 70 2.Z2 Compensation of officers (see instructions -attach Form 1125-E) Salaries and wages (less employment credits) 73 4 Repairs and maintenance Bad debts . Rents Taxes and licenses 17 Interest (see instructions) Charitable contributions 19 100 000 Depreciation from Form 4562 not claimed on Form 1125-A or elsewhere on return (attach Form 4562) 20 Depletion 21 22 13, 250 Advertising Pension, profit-sharing, etc., plans 23 Employee benefit programs Reserved for future use . 24 140 DOG Other deductions (attach statement) 26 Total deductions. Add lines 12 through 26 . Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11. 27 37. 736 Deductions (See i Net operating loss deduction (see instructions) 29a 28 13 92.S Special deductions (Schedule C, line 24, column (c)) . 29b Add lines 29a and 29b 29c Taxable income. Subtract line 29c from line 28. See instructions 30 1382. 536 8 5 Total tax (Schedule J, Part I, line 11) . 31 2018 net 965 tax liability paid (Schedule J, Part II, line 12) . 32 Total payments, credits, and section 965 net tax liability (Schedule J, Part III, line 23) 33 Estimated tax penalty. See instructions. Check if Form 2220 is attached 8 8 8 85 Amount owed. If line 33 is smaller than the total of lines 31, 32, and 34, enter amount owed Tax, Refun Overpayment. If line 33 is larger than the total of lines 31, 32, and 34, enter amount overpaid Enter amount from line 36 you want: Credited to 2019 estimated tax Refunded Sign Under penalties of perjury. I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and bellet, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. elief, it is true, correct, Here May the IRS discuss this return with the preparer shown below? Signature of officer Date Title See instructions. Yes No Paid Print/Type preparer's name Preparer's signature Date PTIN Preparer Check if self-employed Use Only Firm's name Firm's EIN Firm's address Phone no For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11450Q Form 1 120 (2018)